Liquidation priority over tax attachment: NCLT directed release of attached corporate assets for sale under insolvency law.

Where liquidation had already commenced, attached assets of the corporate debtor were required to be realised through the insolvency liquidation process by auction, with sale proceeds distributed under insolvency law. The NCLT directed that the State Tax Department's attachment be lifted so the liquidator could proceed with liquidation of the properties and complete distribution in accordance with the insolvency framework.

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Issues: Whether the attachment raised by the State Tax Department over the corporate debtor's properties should be lifted so that the assets may be liquidated and the sale proceeds distributed in accordance with insolvency law.

Analysis: The application was moved by the liquidator in the context of ongoing liquidation. The properties were stated to be under attachment by the State Tax Department, while the estate also had claims from secured and operational creditors. The order records that, since liquidation had already commenced, the assets were required to be realised through the liquidation process by auction and the proceeds distributed as provided under insolvency law.

Conclusion: The attachment was directed to be lifted and the liquidator was permitted to proceed with liquidation of the properties. The application was allowed.

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